A Digital Copyright Exchange was one of the more radical recommendations made by Professor Ian Hargreaves in his May 2011 report Digital Opportunity: A review of intellectual property and growth, but in its Response to the Hargreaves Review published on 3 August 2011, the UK Government appears to have welcomed the proposal.

Background

The review was commissioned by David Cameron in November 2010 to look at whether the current intellectual property framework is sufficient to promote, or is hindering, innovation and growth in the UK economy. Professor Hargreaves’ answer was that the current IP system is hindering growth and “the United Kingdom’s intellectual property framework, especially with regard to copyright, is falling behind what is needed”.

The system is currently built around the needs of the creator or innovator and is having the effect of preventing further research and development in industrial processes and in the internetbased service economy. In Professor Hargreaves’ view, “The United Kingdom cannot afford to let a legal framework designed around artists impede vigorous participation in these emerging business sectors”. The review discussed IP and economic growth and sets out recommendations, which if followed, according to Professor Hargreaves, will result in more innovation and economic growth.

Digital Copyright Exchange

Of particular interest is the Government’s reaction to Professor Hargreaves’ recommendation that a “digital copyright exchange will facilitate copyright licensing and realise the growth potential of creative industries”. According to the review it could add up to £2.2 billion a year to the UK economy by 2020.

Clearly keen to discover whether that is indeed the case, the Government says that it “wants to see a Digital Copyright Exchange (DCE), or something like it, that enables a functioning digital market in rights clearance and acts as a source of information about rights ownership”. It also sees a DCE potentially as a powerful tool against infringement, there being “no excuse for not checking a single, publicly accessible register”.

The Government nevertheless acknowledges that the success of the DCE will depend on its attractiveness commercially. That in turn would depend first on attracting “a ‘critical mass’ of material that is available, and readily licensable, through the exchange”. To start the ball rolling, the Government says that it “will work to ensure that Crown copyright materials are available via the exchange from day one, or as soon as possible thereafter, and will encourage public bodies to do likewise”.

Although potentially a “compelling proposition to rights holders” the DCE will not be compulsory, not least because that could be contrary to the Berne Convention. Subject to competition law, prices will be set or negotiated by the rights holder and the exchange will be a “genuine marketplace”, rather than “simply being an aggregated rights database”. Access to the DCE will be free at the point of use, open to all users and self-funding, “fees being charged on licensing transactions through the exchange rather than the upload of rights data or search of the database”.

Besides sorting out any competition issues, the challenges identified by the Government include: coming up with a viable financial model for the exchange, bringing together industry stakeholders to create a framework for an exchange and the necessary supporting systems “to allow a functioning licensing system by the end of 2012”, and assessing “the need and scope for incentives to participate in a DCE”.